The ISV Competency Payoff
- By Scott Bekker
For ISVs, it pays to sign up for a Microsoft Partner Program competency,
according to a new study that the software giant commissioned from IDC,
the Framingham, Mass.-based research firm.
The report is part of a profitability series in which IDC analysts compare
partners in a Microsoft Partner Program competency with other Windows-based
partners and non-Windows-based competitors. As part of the project, the
IDC researchers have developed a set of Key Performance Indicators (KPIs)
against which to track the companies. The most recent report, published
in late October, focuses on the ISV/Software Solutions competency and
identifies 11 KPIs affecting ISV profitability.
"ISV competency partners run businesses that outperform those of
the benchmark ISVs whose primary operating system is something other than
Windows in 10 of 11 KPIs," with average deal size being the lone
exception, IDC researchers Matthew Lawton and Stephen Graham wrote. "The
difference in performance in seven of these 10 KPIs is large enough to
be statistically significant."
IDC based the study on surveys of 365 ISVs in the United States and the
United Kingdom. The researchers identified three main groups of ISVs:
- Those that were Microsoft Gold Certified or Certified Partners with
competencies in ISV/Software Solutions
- Those that hadn't yet signed up for the competency but developed
primarily on Windows platforms
- Those that hadn't yet signed up for the competency and developed
primarily on non-Windows platforms
The researchers also found a progression in terms of business performance.
The Windows ISVs did better than non-Windows ISVs, and the ISV competency
partners did better than other Windows ISVs.
Microsoft appears to have multiple goals in commissioning the study.
For partners who have signed up for the ISV competency, the KPIs provide
a framework for evaluating and improving their profitability and the report
reinforces their decision to invest time and resources in pursuing a competency.
Non-Windows ISVs are also a target, but are probably less likely to
switch, especially based on Microsoft-funded research. The key audience
is probably the large contingent of Windows-based ISVs who either haven't
joined the Microsoft Partner Program or haven't yet signed up for the
"Microsoft partners who have not yet committed to the ISV/Software
Solutions Competency are well advised to investigate the advantages it
can provide, and companies that are not Microsoft partners may benefit
from the Microsoft Partner Program and competency initiatives," IDC's
Lawton and Graham wrote.
|Key Performance Indicators
A comparison of the performance of ISV/Software Solutions Competency
partners versus non-Windows ISVs in IDC's recent Microsoft-sponsored
study. (Source: IDC)
|Net profit margin
|Gross profit margin
|Cash flow from operations
|Change in market share
|Average deal size
|Sales cycle (months)
|Implementation time (months)
|Revenue per employee
According to Naseem Tuffaha, senior director for ISV sales and marketing
in the Microsoft Worldwide Partner Group, about 5,000 partner organizations
have signed up for the ISV/Software Solutions Competency. But there's
room for more: There are 25,000 ISVs in the Microsoft Partner Program
as well as 40,000 to 50,000 ISVs total that develop primarily on Windows,
Getting a larger group of those Windows ISVs into the competency, with
its tools for accelerating development, marketing and sales, would help
Microsoft bring more Windows Vista, Office System and other Microsoft-based
solutions onto the market. That, in turn, would pull through sales of
much more Microsoft software.
Scott Bekker is editor in chief of Redmond Channel Partner magazine.